The Republic of Westralia

As the separatists prepare to declare an emphatic victory at the polling booths, the incoming prime minister of the Republic of Westralia,
Colin Barnett
, receives a panicked phone call from a supporter in Canberra.

“The Royal Australian Navy has been scrambled to secure key oil and gas platforms off the coast of Western Australia," the sovereignist supporter says. “There are some who also want to go after the onshore iron ore deposits."

Barnett briefly considers sending out WA’s entire naval fleet, before realising that the three Fisheries Department research and surveillance boats would offer little resistance.

The prime minister-elect instead calls his closest ally, China’s President Hu Jintao, to request pressure be exerted on Canberra to protect China’s interests and resource contracts in what will soon be the world’s newest nation.

It’s an otherwise calm spring afternoon. The year is 2015.

Back in the present, members of the secessionist movement may dream on, but they can take heart that underlying dissatisfaction with Canberra is hitting new highs.

The WA budget forecasts that West Australians will, in a worst-case scenario, receive back only 33¢ for every dollar they pay in goods and services tax by 2014-15 in what is essentially a redistribution of the state’s mineral wealth across the nation.

Barnett is not a secessionist and he accepts the need to help what he refers to as “poorer states". Nonetheless, he is fond of saying that WA’s future rests in looking over the horizon at Asia, not over the Nullarbor to Sydney, Melbourne or Canberra.

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This vision, coupled with the “us against Canberra" rhetoric, has helped make Barnett an extremely popular Premier and it drives WA policymaking. In his view, WA is moving towards financial, if not physical, secession.

“We are being forced, by default, into self-reliance, and that’s the approach to it we’ll be taking," Barnett told a high-ranking business function late last year.

How West Australians view the distribution of the state’s mineral wealth across the country is key to understanding policy decisions that often leave other premiers, and indeed the Prime Minister, scratching their heads.

When the states played their political game of poker to secure greater incentives to sign up to the federal takeover of hospital funding last year, Barnett simply said “no". He would not give up control, or a greater share of GST, to the Commonwealth. “Twenty pieces of silver won’t work with [WA] and won’t work with me," he said.

The parochialism extends into the upper echelons of WA’s business world, where there is a fair share of closet secessionists. To start with, the country’s wealthiest person,
Gina Rinehart
, is thought to have at one stage worked in the offices in which her famous father, Lang Hancock, ran the Westralian Secession Movement in the 1970s.

Prominent Perth-based deal maker and investment adviser
John Poynton
says the strains in the federation caused by arguments about the distribution of GST are mirrored in the European Union.

“It is a lot like the debate going on in Europe at the moment, where Germans are being expected to support generous pension schemes in countries such as Greece," says Poynton, who chairs a committee that promotes WA and encourages citizenship.

Poynton is not a secessionist, but he does say that there is an element in federal policy that can best be described as “suck WA dry", be it the mining tax or GST carve-up.

“It does leave people with a bad taste in their mouth and the feeling that there is not an Australian-wide view . . . and it doesn’t create an environment of co-operation," he says.

That distrust is hardly new.

The secessionist movement gained full force in the 1920s, when Australia’s high tariff walls benefited the manufacturing states of NSW and Victoria but left primary-producing WA at the whims of international markets.

A federal government-appointed royal commissioner, John Entwistle, found that WA was suffering under federation.

“In my opinion Western Australia should never have entered the Federation, but having done so, there is, I feel convinced, only one complete and satisfactory remedy for her present disabilities, viz., Secession," Entwistle wrote.

In 1933, 68 per cent of the 237,000 votes cast by West Australians were in favour of secession in a statewide referendum. A delegation sent to Britain was told that secession would require the approval of the entire nation, silencing the movement until Hancock revived the push in the 1970s, albeit unsuccessfully.

State Liberal MP and avowed secessionist
Norman Moore
tried to revive the idea in 2005, before quickly realising that even the traditional support base for a separation, the Liberals, had long forgone such ambitions.

Moore remains adamant the idea could work, but tells the Weekend Financial Review he would prefer to see the Federation return to its 1901 roots first, with states clawing back powers they have lost to Canberra over the decades.

To be sure, a Republic of Westralia would have its own problems, not the least being the aforementioned weakness of a naval fleet, or wider military.

Interest rates would be significantly higher in Westralia as would the strength of the local currency, making exports of all but booming commodities futile. On the flip side, a separate eastern states federation would enjoy an easing in interest rate pressure.

Federal Treasurer
Wayne Swan
has been at pains to point out that WA has been a significant beneficiary of additional assistance from other states at less buoyant times in the commodity price cycle.

But it’s hard to recall an era when WA spoke positively of the processes used by the Commonwealth Grants Commission to distribute funds.

Chartered accountant and former Liberal state minister for finance George “Max" Evans says if the other states want to share in WA’s mineral riches, they should hand over a share of their gambling revenue.

“We are the only state that doesn’t have poker machines, so we should get compensation back from the other states – we don’t," says Evans, who retired from politics in 2001.

“Succession would never get through now, but we want more independence with our money. We give it away to the other states and they don’t even say thank you."

There’s a bit to be thankful for, even if plenty of the revenue generated from WA’s long pipeline of projects inevitably flows offshore into shareholder and corporate bank accounts.

WA has $109.5 billion of energy, minerals, processing and infrastructure projects in advanced development, according to the Australian Bureau of Agricultural and Resource Economics, out of a total $173.5 billion across the country.

The country’s other resource state, Queensland, has $49 billion. Naturally, Queensland has similar gripes with the Grants Commission as WA, although it doesn’t have the robustness of the WA economy to throw its weight around.

Queensland Treasurer
Andrew Fraser
wrote to commission chairman Alan Henderson in February. His letter read: “Given that the Victorian taxpayer does not contribute to any of the economic and social infrastructure required to support mining communities and to facilitate exports, the result is pure, risk-free profit to Victorians while Queenslanders and Western Australia fund the expansion."

Fast forward to 2015 and Barnett puts down the phone after receiving assurances that Chinese diplomats will immediately be dispatched to Canberra to represent the joint interests of China and the future nation of Westralia.

Satisfied, Barnett thumbs through a folder of national anthem alternatives for the new republic that will be open to public consultation. He chuckles as he pictures his counterpart in Canberra contemplating how to replace the line “girt by sea".